The firm announced that it was affirming the country’s rating at BBB-, one notch above junk, but it was downgrading the local currency by one notch to BBB.

Credit ratings matter a great deal to South Africa’s economy. The financial sector is very large for a country of its size, its market capitalisation to GDP ratio (the size of the financial markets relative to its overall economy) is the third largest in the world, according to data from the World Bank.

More broadly, sovereign debt is being watched carefully across Africa as a commodity markets rout and a stronger dollar makes it more difficult for governments to keep up with their repayments.

Mozambique, one of the world’s fastest growing economies for much of the past decade, admitted last month that its debt levels are unsustainable and that it must restructure repayments if it is to receive further aid from the International Monetary Fund (IMF).

Zimbabwe is the country with the highest sovereign debt levels as a percentage of GDP, owing nearly one-and-a-half times its annual GDP. Four countries in Africa – Zimbabwe, Mozambique, Cape Verde and Seychelles – owe more than they produce in a year.

Debt isn’t necessarily a bad thing, even if it is over 100% a country’s GDP (The US, for example, has a debt-to-GDP ratio of 104.1%). The World Bank and the IMF hold that a country’s external debt is sustainable if it can meet its current and future external debt service obligations in full, without recourse to debt rescheduling or the accumulation of arrears – and without compromising growth.